Measuring ROI on a Call Center Investment
In this brief article we shall be examining the implications for calculating a ROI on a non-revenue generating cost center. Call centers are expensive and essential to business performance in handling effectively customers and their needs but what is he true value of a call center?
Traditional ROI calculations use the level of profit generated by an asset divided by the value of the asset and expressed as a percentage. That's fine but when we seek to ascribe a value to non-profit generating assets we need to look at ways in which we can quantify the value that the call center is contributing to overall business operations.
Call center data management and manipulation has lent itself particularly well to KPI metric and Balanced Scorecard methodology. KPI/Balanced Scorecard techniques are a mainstay of the management of any call center and using the metrics that are being produced from these management information tools allows to start calculating an approximation for ROI.
If we move away from the idea of profit centers that need to be maximized and cost centers that need to be cut so logically increasing profit, we can start thinking of the different business components as contributing value.
What is the value that we can ascribe to a call center it doesn't create anything?
First, lets look at a revised ROI calculation, we can pretty easily work out a cost for the call center which is going to be used in the ROI calculation if we use that as asset value of the ROI number crunching.
Second, if we look at the relative contribution of call center activities we can start ascribing a value based on the effect on our financial and management accounting information. Linking information from customer service feedback and focus groups will allow us to develop an idea of the impact on repeat business for instance. Repeat business is something that our accounting and CRM system will be monitoring so we can get a value for that. The customer survey and feedback groups will also give an indication as to how important our customer service is in winning repeat business orders and that will in turn allow us to infer a value for that proportion of repeat business that is attributable to the call center efforts.
We are now close to being able to perform an ROI calculation in that we have determined a value that is created for the expense of our customer service efforts made by the call center.
Using such attributable value calculations for ROI is not flawless but it does provide a valuable tool for tracking the value of a non-revenue division that is being contributed to overall business success. Tracking ROI of this nature over time, as long as the calculation is made on a consistent basis will help indicate and highlight the relative success of initiatives and investment in the call center.
Calculating an overall ROI can be done by a broader attribution of value that is created by the call center and the total expense that is incurred by it. Used alone such an ROI calculation is not going to be of much help but the use of the incremental ROI that can be calculated for discrete costs and further investment in the call center is very useful for helping to justify whether incremental investment should be made or not.
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